Tuesday, January 12, 2016

Quote of the day: The conservative fallacy about Obama's failure to fail

The Quote: "... for those who don’t know much about either history or the world outside America, the Obama economy offers a powerful lesson in the here and now. From a conservative point of view, Mr. Obama did everything wrong, afflicting the comfortable (slightly) and comforting the afflicted (a lot), and nothing bad happened. We can, it turns out, make our society better after all." - Paul Krugman in the NY Times.

Conservative politicians and those who bankroll them forecast economic doom and gloom. But they are strangely silent about the latest employment numbers. One view of the reluctance of the GOP, now, at last, to trumpet their defunct message is that, just maybe, they are faced with irrefutable evidence that Obama is right and they are wrong. From Steve Benen (MSNBC/MaddowBlog):

The economic news on Friday was even better than optimists expected: the United States added nearly 300,000 jobs in December, wrapping up the second best year for the American job market in over a decade. In fact, looking at the last two years combined, 2014 and 2015 were the best back-to-back years for job creation since 1998 and 1999, at the height of the dot-com boom.

... the fact remains that this strong job growth must be baffling to Republicans. GOP orthodoxy, repeated ad nauseam, is that President Obama’s domestic agenda – the Affordable Care Act, higher taxes on the wealthy, Wall Street regulations, environmental safeguards, et al – is crushing the economy and stifling the American job market.

When I say they [Republican officials and candidates] reacted to jobs report with silence, it’s important to stress that I’m being quite literal. For years, the Republicans’ economic line was, “Where are the jobs?” With over 14 million new private-sector jobs created in the last 70 months, the new, more salient question has become, “Where are the Republicans on jobs?”

The point, however, is that politicians and pundits, especially on the right, constantly insist that presidential policies matter a lot. And Mr. Obama, in particular, has been attacked at every stage of his presidency for policies that his critics allege are “job-killing” — the former House speaker, John Boehner, once used the phrase seven times in less than 14 minutes. So the fact that the Obama job record is as good as it is tells you something about the validity of those attacks.

What did Mr. Obama do that was supposed to kill jobs? Quite a lot, actually. He signed the 2010 Dodd-Frank financial reform, which critics claimed would crush employment by starving businesses of capital. He raised taxes on high incomes, especially at the very top, where average tax rates rose by about six and a half percentage points after 2012, a step that critics claimed would destroy incentives. And he enacted a health reform that went into full effect in 2014, amid claims that it would have catastrophic effects on employment.

Yet none of the dire predicted consequences of these policies have materialized. It’s not just that overall job creation in the private sector — which was what Mr. Obama was supposedly killing — has been strong. More detailed examinations of labor markets also show no evidence of predicted ill effects. For example, there’s no evidence that Obamacare led to a shift from full-time to part-time work, and no evidence that the expansion of Medicaid led to large reductions in labor supply.

So what do we learn from this impressive failure to fail? That the conservative economic orthodoxy dominating the Republican Party is very, very wrong.

Economists could and did argue that history proves this doctrine wrong. After all, America achieved rapid, indeed unprecedented, income growth in the 1950s and 1960s, despite top tax rates beyond the wildest dreams of modern progressives. For that matter, there are countries like Denmark that combine high taxes and generous social programs with very good employment performance.

But for those who don’t know much about either history or the world outside America, the Obama economy offers a powerful lesson in the here and now. From a conservative point of view, Mr. Obama did everything wrong, afflicting the comfortable (slightly) and comforting the afflicted (a lot), and nothing bad happened. We can, it turns out, make our society better after all.